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In and Europe, the Metropolitan Regions con- The „European Metropolitan Region“ concept Comparing European Metropolitan Regions stitute the motors of economic, social and cultural de- velopment. This is the central tenor of the Framework of Since the middle of the 1990s, the largest and most in Germany Action for Spatial Planning („Raumordnungspolitischer important German urban regions have been conferred Handlungsrahmen“) that the Conference of Ministers for the status of „European Metropolitan Regions“. This Wages diverge conspicuously Spatial Planning adopted in 1995. Metropolitan regions includes small regions such as the Rhine-Neckar with are to help shape the spatial development of the region 2.36 million citizens as well as large regions like the through political, social and economic initiatives mutu- Rhine-Ruhr with 11.69 million inhabitants (see Figure ally undertaken in the largest German towns and the cor- 1 and the corresponding Table). Along with core towns The aim of the concept „European Metropolitan Region“ is to strengthen the economic performance responding agglomeration areas. The aim is to intensify and their densely populated agglomeration areas, of a region and to set important impulses for the global economy. The wage level as an indicator of a socio-cultural relations and to strengthen the economic these also cover large rural areas which are intermes- region‘s economic strength shows strong distinctions between the eleven German Metropolitan Regions, power of the Metropolitan Region in respect to growth, hed with the urban centres by way of their commuter along with a clear west-east gradient. competition and innovation (see Box: The „European Met- flows. The metropolitan areas choose themselves to ropolitan Region“ concept). be classified as Metropolitan Regions. The Metropoli- In other words, the Metropolitan Regions are being tan Regions recognized in this way are organised into seen as playing a leading role. By comparing the regional initiatives or associations whose members consist of wage level in the eleven German Metropolitan Regions, municipal regional authorities. This pooling of efforts one can evaluate to what extent they actually adopt this produces advantages for the individual members. leading role, as the wage level of a region is an important They increase their visibility in the region and can pro- indicator of wealth and economic performance. fit economically from exchange and cooperation with other members of the Metropolitan Region. Wages differ greatly among the western German At the present time, there are eleven European Metropolitan Regions Metropolitan Regions in Germany. However their The average wage level diverges greatly among the Met- composition changes constantly because new regio- ropolitan Regions. The nationwide monthly gross median nal authorities join the associations while others lea- wage of 2,615 euros in 2008 is taken as a reference value. ve. Individual regional authorities can also join sever- According to this, 50 per cent of the full-time employed in al associations on account of the loose organisational Germany earn less and 50 per cent more than 2,615 euros structure of the Metropolitan Regions. per month (see Figure 2). For further information, see: www.deutscheme- In western German Metropolitan Regions, the gross tropolregionen.org monthly wage fluctuates between close to 2,489 euros in / and roughly 2,991 euros in . Hence, employees in Stuttgart receive on average about a 20-per-cent-higher wage than employees in Bremen/Olden- Hannover--Göttingen- lies above burg. Compared with the nationwide median wage of ap- the nationwide average. The average monthly wage is proximately 2,615 euros, only the full-time employed subject clearly higher than the median wage. to social security contributions in and Bremen/ Oldenburg earn below average in relation to western Germany. There is a steep wage gradient between the On the other hand, the regional wage level in the western and eastern part of Germany Metropolitan Regions of the Rhine-Ruhr, Rhine-Neckar, In both eastern German Metropolitan Regions / /Rhine-Main, , Stuttgart, and Brandenburg and Central Germany, the wage level is be- 92 IAB . Forum 2/2012 European Metropolitan Regions European Metropolitan Regions IAB . Forum 2/2012 93

low the level for Germany as a whole. The average gross ployees in intensive, knowledge-based sectors. But even Figure 1 European Metropolitan Regions in Germany 2008 monthly wage in Berlin/Brandenburg is just short of 2,241 when subtracting these factors, employees in the Met- euros. With 1,908 euros, the Metropolitan Region of Cen- ropolitan Region of Munich still earn 10 per cent more, tral Germany lags well behind in comparison to Berlin/ hence exhibiting the highest wage level of all the Metro- Brandenburg, and also in comparison to the eastern Ger- politan Regions. On the basis of the adjusted figures, 4 man average of 1,977 euros. to 6 per cent higher wages are paid in the Metropolitan In the countrywide comparison of the European Regions of Frankfurt/Rhine-Main, Stuttgart and Hamburg. Metropolitan Regions it is conspicuous that employees in The adjusted monthly wage in the regions Rhine-Ruhr, Bremen/Oldenburg, the region with the lowest wages in Bremen/Oldenburg, Hannover-Braunschweig-Göttingen- the western part of Germany, still on average earn about Wolfsburg, Rhine-Neckar und Nuremberg lies very close to Hamburg 250 euros more per month than employees in Berlin/ the nationwide average. Brandenburg where the wage level lies clearly above the Bremen/Oldenburg eastern German median wage. This mirrors the continuing strong wage gradient between the western and the east- Table for Figure 1 Berlin/Brandenburg ern part of Germany. European Metropolitan Regions in Germany 2008 Hannover- Braunschweig- Wage differentials are influenced by many factors Göttingen- Full-time Inhabitants Year of Wolfsburg However the unadjusted wage differentials described Metropolitan Regions employed in in millions admission above are only of a descriptive nature. It is not sufficient millions Mitteldeutschland to only analyse these, as wage differentials between the Rhine-Ruhr 11.69 2.50 1995 Rhine-Ruhr Metropolitan Regions may be influenced by a multitude of Central Germany 6.90 1.04 1997 factors, for instance, by differences in the employment or Berlin/Brandenburg 5.95 1.27 1995 establishment structures. These different influencing fac- Frankfurt/Rhine-Main tors can be identified or subtracted out by means of de- Munich 5.60 1.44 1995

composition procedure (see Box „Data and Methods“). A Frankfurt/Rhine-Main 5.52 1.45 1995 Nuremberg part of the differences in wages is thus due to differences Stuttgart 5.29 1.42 1995 in the regional employment or establishment structures. Rhine-Neckar The remaining „unexplained“ part comprises, along Hamburg 4.29 0.95 1995

with the non-observable characteristics, the extra wages Hannover-Braunschweig- Stuttgart 3.88 0.90 2005 or wage reductions that the employees of the particu- Göttingen-Wolfsburg lar Metropolitan Region receive in comparison to the Nuremberg 3.60 0.88 2005 nationwide average. For example, in Munich the calcu- Munich Bremen/Oldenburg 2.73 0.53 2005 lations show that two-thirds of the on average 15-per- cent-higher wage cannot be explained by observable Rhine-Neckar 2.36 0.52 2005 Metropolitan Regions differences (see Figure 3). The remaining third relates to 57.13 12.91 – in total observable factors such as employment, establishment Germany in total 82.00 19.68 – and regional structure. Notes: Metropolitan Regions and populations on 31.12.2008 from the Regional Monitoring of the Metropolitan Regions (BBR/IKM 2010). For instance, the differing sectoral structure plays an Employees subject to social security contributions in full-time without trainees, extrapolated on the basis of the Integrated Employment Biographies Sample (Stich- probe der Integrierten Arbeitsmarktbiografien/SIAB) on 30.06.2008. important role. The Metropolitan Regions with the high- Note: The year of admission indicates the year of admission to the association The core towns of the respective Metropolitan Regions have been coloured in a darker shade. of European Metropolitan Regions. Source: Graphic representation based on Rusche/Oberst (2010), own calculations. ©IAB est level of wages – namely Stuttgart, Rhine-Neckar and Munich – also exhibit by far the highest proportion of em- 94 IAB . Forum 2/2012 European Metropolitan Regions European Metropolitan Regions IAB . Forum 2/2012 95

Figure 2 Gross median wage in the Metropolitan Regions in 2008 in euros

2900

2700 German average

Hamburg 2500 Rhine-Ruhr Frankfurt/Rhine-Main Stuttgart Munich 2300 Bremen/Oldenburg Hannover-Braunschweig- Göttingen-Wolfsburg 2100 Rhine-Neckar Nuremberg Berlin/Brandenburg Central Germany 1900

Note: The diagram represents the gross median wages of full-time employees subject to social security contributions, compiled on 30.06.2008. Source: Sample of Integrated Labour Market Biographies (Stichprobe der Integrierten Arbeitsmarktbiografien/SIAB), monthly wages, own calculations. ©IAB

In comparison to the other Metropolitan Regions and From a purely descriptive perspective, the wage level in the to the country as a whole, the two eastern German Metro- Metropolitan Region of Munich with the highest incomes politan Regions Berlin/Brandenburg and Central Germany surpasses the national average by close to 15 per cent, trail far behind. However the deficit in wages of the Cen- while the region with the lowest incomes, Central Germa- tral German Region decreases considerably if the respec- ny, lies a good 30 per cent below the national average for tive employment and establishment structures are taken Germany. When one subtracts the regional differences in into account. Nevertheless, in comparison to the country- the employment and establishment structure, this gap still wide level, the employees there still have to accept a wage amounts to plus 10 and minus 19 per cent respectively. reduction of 10 to 19 per cent. Some Metropolitan Regions – above all the regions in southern German with Munich as a leader but also Frank- Conclusions furt/Rhine-Main, Stuttgart and Hamburg – can be regard- Since the middle of the 1990s, eleven Metropolitan Re- ed as being especially fit for the future and productive on gions have established themselves in Germany with the account of their above-average high wages. aim of strengthening the economic power of the respec- The other western German Metropolitan Regions trail tive region by means of more intensive cooperation. An in- far behind in comparison to the leading group and rank dicator of the regional economic power is the wage level. close to the national average in relation to regional earn- 96 IAB . Forum 2/2012 European Metropolitan Regions European Metropolitan Regions IAB . Forum 2/2012 97

Data and Methods Figure 3 Adjusted wage gap of the Metropolitan Region versus the German average as a whole 2008 The evaluations of region-specific wage differentials are Region and the remaining areas of the country are de- in per cent based on the SIAB 7508 (Stichprobe der Integrierten composed into two parts, one explained and one unex- Arbeitsmarktbiografien/Integrated Employment Biogra- plained. Central Germany

phies Sample) which contains data on the employment The explained part of the wage differential indi- Berlin/Brandenburg

biographies of two per cent of all employees subject to cates differences in the configuration, that is, in the Nuremberg social security contributions on a daily basis. The evalu- characteristics of employees and/or establishments. This Rhine-Neckar ations are limited to all persons employed on a full-time can reflect differences in gender, nationality, education, Hannover-Braunschweig- basis on 30 June 2008 and between the ages of 15 and in actual employment experience, in tenure, in one‘s Göttingen-Wolfsburg Bremen/Oldenburg 65. Trainees, marginal employees and part-time employ- position with regard to one‘s profession, or in the num- ees are excluded from the analyses. ber of different employers one has had in the course Munich The data set used does not contain any quantitative of one‘s career. At the establishment level, there may Stuttgart information on the working time performed. A difference be differences in relation to the industry the establish- Frankfurt/Rhine-Main

in wages in the case of part-time or marginal employ- ment belongs to, the size of the establishment, and its Rhine-Ruhr unexplained difference ees could be due to differences in the number of work- location. The effects of these differing characteristics on Hamburg total difference

ing hours. The actual wages of persons above the social wages can be subtracted out. On account of the lack of -40 -30 -20 -10 0 10 20 security contribution assessment ceiling are not captured available data, the regional price level is not explicitly Note: The diagram represents the adjusted wage gap of full-time employees subject to social security contributions, compiled on 30.06.2008. in this data set. Instead the social security contribution channelled into the analysis. However it is partly taken Source: Sample of Integrated Labour Market Biographies (Stichprobe der Integrierten Arbeitsmarktbiografien/SIAB), monthly wages, own calculations. ©IAB ceiling is declared here. In order to prevent the wages into account indirectly by including regional types in the of these persons from being underestimated, the wages calculations. References above the social security contribution assessment ceiling The remaining, unexplained part of the wage The authors were imputed separately for each Metropolitan Region as differential contains the non-observable and/or non- Bundesinstitut für Bau-, Stadt- und Raumforschung (BBSR), Initiativkreis well as for the remaining parts of Germany according to measurable differences in the characteristics of persons, Europäische Metropolregionen in Deutschland (IKM) (2010): Regionales Monitoring 2010: Daten und Karten zu den Europäischen Metropol- the eastern and western sections, that is, estimated and establishments and regional types in comparison to Ger- regionen in Deutschland. Anja Burghardt updated on the basis of a distribution assumption. many as whole. In addition the unexplained part meas- is a researcher at the Research Bundesministerium für Raumordnung, Bauwesen und Städtebau (1995): In order to calculate the unexplained region-specif- ures the difference in the remuneration of persons with Data Centre of the BA at IAB. Raumordnungspolitischer Handlungsrahmen: Beschluss der Konferenz ic wage differentials, a Blinder-Oaxaca-decomposition the same observable characteristics employed in differ- der Minister für Raumordnung in Düsseldorf am 8. März 1995. [email protected] is carried out at the individual level. Here the average ent Metropolitan Regions (Metropolitan Region versus wage differential between the respective Metropolitan Germany as a whole). Rusche, Karsten; Oberst, Christian (2010): Europäische Metropolregionen in Deutschland – Eine regionalökonomische Evaluation. Raumforschung und Raumordnung (64) 4, S. 243-254. Daniela Hochfellner is a researcher at the Research http://www.deutsche-metropolregionen.org/ueber-ikm/, Zugriff am 09.08.2012. Data Centre of the BA at IAB. ing opportunities. This applies particularly to the regions [email protected] Bremen/Oldenburg, Hannover-Braunschweig-Göttingen- Wolfsburg, Rhine-Ruhr, Rhine-Neckar und Nuremberg. Dr Marion König Employees in the Metropolitan Regions of Berlin/Branden- is a researcher in the research group of the Director and at the burg and Central Germany continue to earn considerably Research Data Centre of the BA less than the nationwide average for employees. Thus the at IAB. west-east gradient, which is still strongly pronounced, also [email protected] manifests itself at the level of the Metropolitan Regions.